Multimedia Mania/abacus-multimedia-mania.iso/dp/0101/01016.txt

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$Unique_ID{bob01016}
$Pretitle{}
$Title{Iran-Contra Affair: The Report
Chapter 3A   The Enterprise Assumes Control of Contra Support}
$Subtitle{}
$Author{Various}
$Affiliation{}
$Subject{north
contras
air
resupply
secord
country
operation
american
support
fdn}
$Date{1987}
$Log{}
Title:       Iran-Contra Affair: The Report
Author:      Various
Date:        1987

Chapter 3A   The Enterprise Assumes Control of Contra Support

     In the summer of 1985, Congress voted to appropriate $27 million for the
Contras' humanitarian needs, including food, medicine and clothing.  At the
same time, the covert program, run by the National Security Council (NSC)
staff entered a new and bolder phase.  With the Contras' daily living needs
taken care of by Congress, and their requirements for arms having been met
through Country 2's prior donations, the NSC staff was able to focus on
attempting to improve the Contras' military effectiveness.  This involved
establishing an air resupply program for the main Contra fighting force
operating in the North of Nicaragua, the Nicaraguan Democratic Force (FDN),
and promoting the opening of a second Contra front in the South of Nicaragua
by supporting other Contra fighters, independent of the FDN, who were
operating there.  This support for the southern forces included the
procurement of arms as well as the establishment of an air resupply program.

     Disappointed at the failure of Adolfo Calero to develop a logistics
infrastructure, Lt. Col. Oliver North asked Gen. Richard Secord and his
associates to assume new responsibilities that under the Boland Amendment the
U.S. Government could not undertake.  Secord agreed to continue to handle all
future weapons procurement for the Contras and to acquire and operate a small
fleet of planes to make air drops of weapons, ammunition, and other supplies
to the Contras in both northern and southern Nicaragua.  North arranged the
funding for Secord to carry out these activities, directing third-country and
private contributions to Secord that previously went to Calero.  These funds
were later augmented by the diversion from the Iranian arms sales that North,
with Admiral John Poindexter's approval, initiated.

     Financed by contributions and the diversion, the Secord group purchased
and operated five airplanes, built an emergency airstrip in Costa Rica,
maintained an air maintenance facility and a warehouse in another Central
American country, and hired pilots and crew to fly the air drop missions. They
also purchased weapons and ammunition in Europe and delivered them to Central
America for use by the Contras in the south and north.  North called the
organization "Project Democracy."  Secord and his partner, Albert Hakim,
referred to it as the Enterprise.

     The Enterprise, though nominally private, functioned as a secret arm of
the NSC staff in conducting the covert program in Nicaragua.  While Secord
controlled the operational decisions of the Enterprise, North remained in
overall charge of the Contra support program.  He set the priorities and
enlisted the support of an Ambassador, Central Intelligence Agency (CIA)
officials, and military personnel to carry out the air resupply operation. He
dealt with crises as they arose, sometimes on a daily basis.  In carrying on
these tasks, North had the unqualified support of Admiral Poindexter, who had
replaced Robert McFarlane as National Security Adviser in December 1985.

     The efforts of the NSC staff and the Enterprise to carry out a government
function with a makeshift covert organization were, however, dogged by
problems from the beginning.  The Enterprise's aircraft were in poor condition
and the group had to overcome numerous tactical problems in carrying out its
mission.  While the Enterprise conducted routine air drops in northern
Nicaragua, it was not able to begin a regular air drop operation in the south
until late summer of 1986 - at a time when both Houses of Congress had voted
to authorize the CIA to resume its support for the Contras with appropriated
funds and when the Enterprise was trying to sell its assets to the CIA.  The
operation ended abruptly in October 1986 when the plane that Eugene Hasenfus
was on was shot down while on a mission to drop supplies to the Contras in
Nicaragua.

     Before that and for more than 2 years, the NSC staff had secretly
achieved what Congress had openly disapproved in the Boland Amendment - an
extensive program of military support for the Contras.  The Boland Amendment
operated as a restraint on disclosure, not on action, as the NSC staff placed
policy ends above the law.

The Enterprise's Mission is Expanded

     On June 12, 1985, the House passed a bill approving $27 million in
humanitarian assistance to the Contras, paving the way for final approval and
signature by the President in August 1985.  While that vote virtually ensured
that the Contras would have adequate food, medical supplies, and other
provisions, it also strictly limited the money to nonmilitary uses.

     The provision of covert military assistance remained the secret business
of the NSC staff.  In the summer of 1985, articles appeared in the press
speculating about the role of the NSC staff in assisting the Contras and
Congress began inquiring of the National Security Adviser whether this was
true.  Yet, at this very time, the NSC staff decided to extend its covert
program to include a system for resupplying Contras in the field.  Some of the
Contras fighting within Nicaragua were as many as 30 days away by land from
border areas.  To keep them supplied and to encourage other fighters to move
from border sanctuaries to Nicaragua, a capacity to make aerial drops of
ammunition and other supplies was essential.

     As early as February 1985, North had urged Calero to set aside $10
million from the funds raised from Country 2 to hire a logistics expert and
create a resupply operation.  But the available money was used to purchase and
stockpile weapons.  As a result, by summer 1986, the Contras had a surplus of
arms.  Their problem was how to deliver these weapons to the fighters.  For
North, the answer lay with Secord and his group.

     In early July, North held a meeting in Miami of Contra leaders and
members of Secord's group to arrange for what Congress had refused to fund -
the air resupply of lethal material for the Contra forces inside Nicaragua.
Present were North, FDN leader Adolfo Calero, Enrique Bermudez, the FDN
military commander, Secord, and his associates, Thomas Clines and Rafael
Quintero.

     North began the meeting with an expression of a loss of confidence in the
way the FDN was handling the donated funds he had directed to the FDN. Secord
described North's remarks:

The meeting commenced on a pretty hard note, with Colonel North being worried
about and critical of the Contras, because he had been receiving reports that
the limited funds they had might be getting wasted, squandered or even worse,
some people might be lining their pockets.

His concern, as he articulated it, was a very serious one.  He was afraid that
if anything like this was going on that since they were dependent on
contributions that the image of the Resistance could be badly damaged; it
could ruin us, in fact, and he was very, very hard on this point.

     North's solution, though not unveiled at the meeting, was to have Secord
and his group take over the procurement function for the Contras.  As Robert
Owen, North's courier, testified, "I think he and General Secord felt they
probably could do a better job" of handling the funds than the Contras.

     North had decided to furnish the FDN directly with arms, air support, and
other supplies.  He would no longer leave to the Contras the task of spending
their own money on these goods and services.  Almost immediately after the
Miami meeting, Secord's partner, Albert Hakim, established the Lake Resources
account in Geneva, Switzerland, and thereafter virtually all donated funds
were directed by North to the Lake Resources account in Switzerland, not
Calero's accounts.  The Secord group - the Enterprise - would no longer
function simply as an arms broker from which Calero would purchase the arms.
With the contributions, it would make all the decisions on arms purchases and
supply the Contras with the weapons and the other support they needed, without
receiving from the Contras payment for the arms.

     The Contras' management of money was only one of the problems raised at
the all-night meeting in Miami.  More important was the need to create an
airlift system to drop supplies to FDN troops inside Nicaragua and to open a
Southern front.

     The first priority, all agreed, was the delivery of the arms already
purchased to the soldiers fighting near and inside Nicaragua.  Before the
Boland Amendment was passed, the CIA helped to arrange the airlift of arms and
other supplies to the troops.  When the CIA withdrew, the Contras had
difficulty maintaining this important logistical function.  The FDN's aircraft
were few and could not effectively and consistently penetrate Nicaraguan
airspace past Sandinista defenses.  Moreover, the FDN lacked properly trained
personnel.  The continuing resupply of troops and its attendant logistics,
maintenance, and communications comprised the "sinews of war," the
infrastructure necessary for any sustained and effective fighting force. North
turned to Secord to establish and run the air resupply operation.

     The participants in the Miami meeting also agreed on the need to open a
Southern front.  With the FDN, the principal Contra force, operating in the
North, the Sandinistas could concentrate their military forces on the Northern
front.  Forcing the Nicaraguans to fight a two-front war by building up a
Contra force in the South was elemental military strategy.  Calero, however,
continued to concentrate his resources on his own organization in the North,
the FDN.

     The air resupply and Southern front projects went hand-in-hand.  Because
neighboring countries were reluctant to permit land resupply from inside their
borders, a southern force could not live without air resupply.  And the FDN
could not, or would not, undertake this mission on its own.

     Thus, the air resupply operation that North asked Secord to undertake was
also the key to the Southern front.  In giving this assignment to Secord,
North testified that he acted with McFarlane's authority.  McFarlane denied
this.  Poindexter, however, stated that he was "aware that Colonel North was
concerned about the logistics operation, the way it was going, and I was aware
that he was going to talk to General Secord about setting up a more
professional logistics support operation as a private operation."

The New Humanitarian Aid

     As the Enterprise began implementing the plans laid in Miami, the Contras
received a boost from Washington.  On August 8, 1985, President Reagan signed
legislation authorizing $27 million in humanitarian aid to the Contras.  For
the first time since May 1984, the Contras would receive U.S. Government
funding as well as intelligence support from the CIA.  Although the Boland
Amendment remained in effect, new legislation specified that the Amendment did
not prohibit exchanging information with the Contras.

     The legislation prohibited the CIA or the Department of Defense (DOD)
from administering the new humanitarian funds and required that the President
ensure that any assistance "is used only for the intended purpose and is not
diverted" for the acquisition of military hardware.  The State Department was
chosen to administer the aid.  By executive order signed on August 29, 1985,
the President created the Nicaraguan Humanitarian Assistance Office (NHAO) in
the State Department.

     The State Department was reluctant to accept this responsibility.  The
Department had no experience and lacked the organization to feed and provide
for the daily needs of troops.  To run NHAO, Secretary George P. Shultz tapped
Ambassador Robert Duemling, a seasoned diplomat, but with no prior experience
in administering an aid program.  Secretary Shultz cautioned Duemling to
administer the aid not only with "enthusiasm" but also with "care."
Ambassador Duemling found the program difficult to administer from the start.
Nicaragua's neighbors did not officially recognize the Contra movement, even
though Contras operated unofficially out of their territory.  The cargo of the
initial NHAO flight on July 10 was impounded when local Central American
authorities learned that an NBC film crew was on board at the invitation of
Calero's brother.  Thereafter, that Central American country barred, for a
period of time, the entry of NHAO employees, which prevented them from
conducting any on-site accounting of supplies or of the Contras' needs.
Deumling's difficulties were definitional as well as operational.  NHAO had
continually to assess whether various items were "humanitarian" within the
meaning of the statute.

Preparations for the Resupply Operation

     In the beginning of August, Secord met with North and others to discuss
the steps necessary to establish the resupply program.  First, a logistics
organization consisting of aircraft, spare parts, maintenance, communications,
and trained personnel had to be set up.  For that, Secord turned to former
Air Force Lt. Col. Richard Gadd, who since his retirement from the military in
1982 had been providing, through a private business, air support to the
Pentagon.

     The second task was to obtain a secure operating base from which the
aircraft could launch their missions.  For this, Quintero, on Secord's
instructions, consulted with the Contra leaders and chose a military airbase
in a Central American country ("The Airbase".)  Secord and North concurred in
this choice.

     Finally, Secord concluded that to establish a sustained air resupply
operation on the Southern front, an emergency airstrip was necessary in the
South.  North suggested to Secord Santa Elena in the northwest corner of Costa
Rica, which North believed could also be used as a covert secondary operating
base for resupply to the Southern front.

U.S. Support for the Covert Operation

     The plans made in Miami for a resupply operation and a Southern front
could not have been implemented without the active support of U.S. Government
officials.

     In July 1985, almost immediately after the Miami meeting, North asked
Lewis Tambs, the newly appointed Ambassador to Costa Rica, to help open a
Southern front for the Contras, a request that Poindexter approved.  Tambs
agreed without consulting Secretary Shultz.  Later that summer, North
specifically asked for Tambs' help, as well as that of CIA Chief Tomas
Castillo, to facilitate the construction and use of the airfield.

     North testified that he had received authorization from Director of
Central Intelligence William J. Casey to bring Castillo into the resupply
operation.  Moreover, according to North, the airstrip was discussed in the
Restricted Interagency Group on Central American Affairs, which consisted of,
among others, North, the Chief of the Central American Task Force (CATF) at
the CIA and the group's chairman, Elliott Abrams, Assistant Secretary of State
for Inter-American Affairs.  Abrams acknowledged the discussions, but
testified that he believed "private benefactors, as we used to call them, were
building the airstrip."

The Airfield Is Planned

     On August 10, 1985, North flew to Costa Rica where he met with Castillo
and Tambs.  North and Castillo discussed the establishment of a secret airbase
that would permit moving all Contra military operations inside Nicaragua for
resupply by air.  Castillo and Tambs then worked to achieve the establishment
of the airfield and air resupply depot for the Contra forces.  Castillo
reported these developments to the Chief of the CATF at CIA headquarters.  The
Chief replied that he was pleased with these developments but he
"emphasize[d]" to Castillo that neither the CIA nor DOD could "become involved
directly or indirectly" in the project.

     Less than a week later, North sent Robert Owen to Costa Rica to scout the
Santa Elena site.  Owen met with Tambs, who introduced him to Castillo as a
North emissary.  The next day, Owen and Castillo surveyed Santa Elena.  Owen
took photographs and returned to Washington with a map, photos, and a
description of various logistical problems presented by the air strip.  North
later told Castillo that he thought Santa Elena was an ideal place for a
refueling and resupply base.

     Meanwhile, North recruited a former Marine colleague, William Haskell, to
negotiate the purchase of the land at Santa Elena for the airfield.  By the
beginning of September, Haskell, under the alias of Olmstead, arrived in Costa
Rica to meet with Joseph Hamilton, an American who headed the group that owned
the land at Santa Elena.  While Tambs assisted in bringing the parties
together, Castillo alerted North that local groups had to be involved in the
construction.  Eventually, Secord paid more than $190,000 for local
contractors and guards at the airstrip.  On October 3, Haskell called North
with news of Hamilton's tentative approval for the sale of the land.  Shortly
thereafter, North, Haskell, Secord, Gadd, and Hakim met.  At North's request,
Gadd agreed to assemble a team and assume responsibility for constructing the
airstrip.

The Airbase Is Secured

     Once the Airbase in the other Central American country was selected as
the most desirable main base for the air resupply operation, North also took
the necessary steps to obtain host-government approval, which required the
assistance of other U.S. Government officials.  North's notebooks reflect that
on September 10, 1985, he met with Col. James Steele, a U.S. Military Group
Commander stationed in Central America, and Donald Gregg, Vice President
Bush's National Security Adviser.  Among the discussion topics North listed
was a "Calero/Bermudez visit to [the Airbase] to estab[lish] log[istical]
support/maint[enance]," as well as other possible locations for the resupply
base.  Gregg, however, testified that he did not know of the resupply
operation prior to the summer of 1986.

     On September 16, North's notebooks reflect a call from Steele, "what
about Felix - help for a/c [aircraft] maint[enance]."  An ex-CIA operative,
Felix Rodriguez had volunteered as a private American citizen to aid a Central
American Air Force in counterinsurgency maneuvers.  Rodriguez had a close
relationship with a local Commander stationed at the Airbase ("The
Commander").  In a letter dated September 20, North asked Rodriguez to obtain
service space at the Airbase for one C-7 Caribou aircraft and for occasional
Maule maintenance.  The Maule would be operated by the FDN and the Caribou by
a private contractor for aerial resupply of both the FDN in the North and
eventually in support of a Southern front, North wrote.  North also said
Rodriguez could use North's name with the Commander.  Rodriguez agreed to help
and obtained the Commander's approval.  Poindexter had sanctioned North's
efforts to obtain the Central American country's help in the logistics of air
resupply.

     Securing suitable aircraft that the Enterprise could afford proved
difficult.  In the summer of 1985, North met with both Secord and Calero on
the most immediate aircraft needs of the FDN and the resupply operation.  They
decided that their first need was a C7 Caribou, a twin-engine propeller
aircraft capable of carrying a 5,000-pound cargo over a 900-mile range.  By
November 1985, Gadd, whose task it was to locate and purchase the airplanes,
had found three surplus C-123 airplanes belonging to a Latin American Air
Force.  Gadd had earlier formed Amalgamated Commercial Enterprises (ACE), a
shelf company registered in Panama, to hold title to the aircraft.  ACE was
owned equally by Gadd and Southern Air Transport of Miami, which was to
provide maintenance and other logistical support.

     The logistics director of the Latin American Air Force was unwilling to
sell the airplanes - whose use was for military transport - to Gadd without a
sign of official U.S. Government approval.  So, Gadd turned to North for
assistance, who decided to intercede in an effort to obtain the airplanes.
North told Gadd and Secord that he requested both Robert McFarlane and the
State Department's assistance.  On November 15, North indicated in his
notebook that he called "Elliott" "re call to [the Latin American country]"
for the purpose of telling [that country] that "ACE is OK."  Abrams, however,
denied any knowledge of the planes belonging to the Latin American country's
Air Force.  In addition, North asked Vince Cannistraro, a colleague at the
NSC, to intercede with the Latin American country.  In the PROF note on
November 20, North referred to Cannistraro's upcoming call and provided the
following talking points:

A reputable business organization called A.C.E. Inc. is negotiating with your
air force to buy three excess C-123 aircraft, a number of engines (48) and
some spare parts.

A.C.E. is a legitimate company which will use the aircraft for a good purpose
that is in the interest of your country and ours - humanitarian aid deliveries
to anti-communist resistance forces (. . . Nicaragua).

Apparently the logistics director for the air force . . . was concerned that
A.C.E. (Amalgamated Commercial Enterprises) may not be legitimate or that the
A/C could be used for drug running or the like.  This is not the case.

It would be very helpful if you could contact someone who can clarify the good
reputation of A.C.E. and encourage [the logistics director] to consummate the
offer which has been made by A.C.E.  The need is great for these planes.  They
will help the cause of democracy where it is most needed.

Nonetheless, the Government of the Latin American country did not approve, and
the Enterprise had to look elsewhere.

     From the inception of the air resupply operation in July 1985, North
impressed upon Secord the fact that they were operating with donated funds
that were strictly limited.  Consequently, more preferable airplanes that were
examined by Gadd and discussed by North and Secord, such as the Casa 212 and
the 1100 turbo jet propeller-driven aircraft, were rejected because of their
high cost, in favor of the less expensive C-7 and C-123.

Country 3 Comes Through

     More third-country money was needed to support the Contras.  McFarlane
had barred a return to Country 2, and John K. Singlaub had since the end of
1984 been trying unsuccessfully to obtain money from Country 3.

     In the summer of 1985, North turned to Gaston Sigur, a Senior Director
for Far Eastern and Asian Affairs on the NSC staff, to seek his assistance
with Country 3.  According to Sigur, North told him that it was an "emergency
situation," and that he and McFarlane were aware that Country 3 "might have an
interest in giving some assistance, financial assistance in the humanitarian
area to the Contras."  North, too, testified that he had gone to Sigur with
the knowledge, and approval, of McFarlane.  McFarlane testified to the
contrary, claiming that he was "firm" with North "in saying to him absolutely
no participation by you or any other staff member in any kind of approach to
this country."

     Sigur recalled that when North asked him to set up the meeting, he
inquired, "[N]ow everything here is quite legal?"  to which North replied,
"[O]h yes, we have checked all that out and there is no question about that."

     Sigur met with a Country 3 official and, without mentioning any specific
amount of money, learned that the representative needed "to go back to his
home government on it."  The same day, Sigur went to McFarlane and told him
that any contribution from Country 3 would have to be made directly through
U.S. Government channels.  According to Sigur, "Mr. McFarlane's response to
that was that this is not possible, that cannot be done, and so I saw that as
the end of that, and I told Colonel North about it."

     North was not deterred.  He asked Sigur to arrange a face-to-face meeting
with the Country 3 representative.  At the ensuing meeting at the Hay-Adams
Hotel in the fall of 1985, North told the Country 3 representative that "this
country [U.S.] would be very grateful if they were to make the contribution."
North's plea was successful.  Sometime later, the Country 3 official responded
with a $1 million contribution in "humanitarian assistance.  North then sent
Owen to give the official an envelope containing the Swiss bank number of the
Enterprise's Lake Resources account.  The $1 million was transferred to Lake
Resources and another $1 million followed in the early months of 1986.

The Link With NHAO

     Without the knowledge of its supervisors, the Nicaraguan Humanitarian
Assistance Office (NHAO) program was used to further the Enterprise's
activities.  Robert Owen became the first link between NHAO and the covert
operation.  In mid-September 1985, Owen applied to Ambassador Duemling for a
position in the humanitarian aid office.  North recommended Owen as a "can do"
person "who knows the scene," but Duemling declined to hire him.

     Duemling still refused to hire Owen even after the three directors of the
United Nicaraguan Opposition (UNO) - Calero, Arturo Cruz, and Alfonso Robelo -
wrote Duemling requesting Owen's help.  North, however, continued to press for
Owen's employment.  At a Restricted Interagency Group meeting on October 11,
North complained about the October 10 NHAO resupply flight impounded by
Central American authorities, claiming that it would never have happened if
Owen had been working for NHAO.  Only then did Duemling relent and agree to
fund a UNO contract with Owen's company, the Institute for Democracy,
Education and Assistance, Inc. (IDEA), to assist in disbursing the
humanitarian aid.

     North exploited Owen's new position by using his trips, funded by
humanitarian aid dollars, to transfer and receive information about the Contra
war and the fledgling resupply operation.  Following his trips to Central
America, Owen would submit two reports - one to NHAO describing humanitarian
services performed and another to North describing his activities in
coordinating lethal aid.  The grant agreement with the State Department barred
Owen from performing "any service" related to lethal supply "during the term
of this grant."

     North also told Owen that he should introduce Gadd to Mario Calero, who
was in charge of purchases for the FDN in the United States, so that Gadd
might get a contract to fly humanitarian aid supply missions.  Later, North
personally accompanied Gadd to meet with Ambassador Duemling and urged
Duemling to award Gadd an air delivery contract, to which Duemling, unaware of
Gadd's role in the lethal resupply operation, agreed.